UBS dark pool launches in SpainUBS MTF, one of Europe’s largest broker-run dark pools, will start offering Spanish equities from Wednesday, as alternative markets continue to capitalise on reforms that have helped challenge the dominance of Spain‘s domestic stock exchange.

The alternative venue owned by the Swiss bank allows its members to match orders anonymously in European stocks and will join eight other so-called dark pools in offering trading in Spanish equities from July 3. According to data from Thomson Reuters Equity Market Share Reporter, UBS MTF traded €7.72bn-worth of European equities last month.

The addition of Spanish stocks to UBS MTF comes as dark pools and displayed alternative trading platforms, including Bats Chi-X Europe and London Stock Exchange-owned Turquoise, have finally made inroads into the Spanish market.

Bolsas y Mercados Españoles, Spain’s national stock exchange, has seen its share of equity trading fall from 92.5% at the start of the year to 80.21% at the end of June, according to the Thomson Reuters data. The dark pools analysed by Thomson Reuters accounted for 2.6% of overall trading in Spanish stocks last month, compared to 1.2% in February. Dark trading represented 4.4% of overall trading in EU-listed equities June.

Competition among trading platforms in Spain had been limited because of a reluctance from Spanish regulators to fully adopt EU-wide trading rules in the 2007 Markets in Financial Instruments Directive. The directive allowed equity trading to occur away from national stock exchanges for the first time, leading to a proliferation of alternative platforms that have gradually siphoned trading away from the domestic bourses.

But the new venues struggled to gain traction in Spain, mainly because of the high costs associated with the domestic clearing and settlement infrastructure, which is owned by the BME.

Richard Semark, CEO of UBS MTF, told Financial News, the introduction of his dark pool in Spain was due to increased demand for trading on alternative venues as evidenced by the recent market share surge.

“It’s taken a bit longer for Spain to open up to alternative markets, largely because of complications with the post-trade process, but changes to local rules mean these challenges are being solved. Settlement in Spain is still a more laborious and expensive process but we are now able to offer trading in the country in a way that is cost effective for our members,” he said.

The BME declined to comment.

The growing share of alternative platforms in Spain means its equity market is finally beginning to bear a greater resemblance to other EU markets that have fully adopted Mifid.

In Germany, for example, 63.2% of share trading was conducted on Deutsche Borse last month, while the London Stock Exchange had a 51.86% share of trading in UK stocks in June.

More recently, alternative venues in Spain have also benefited from the end of a short selling ban in the country on January 31. The ban was introduced in July 2012 in a bid to restrict speculative trading activity but also curbed the ability of marketmakers to provide short-term liquidity.

Short selling – the practice of borrowing shares, selling them and then buying them back at a lower price in the future – allows marketmakers to manage the risk they take on from supplying continuous bid and offer quotes to the venues they operate on. Such firms make up the majority of trading activity on many alternative venues.

Chi-X described the news as a major milestone for the Chi-FX platform.

New York – Chi-X Global Holdings said BM&FBOVESPA S.A., Bolsa de Valores, Mercadorias e Futuros had accepted its Chi-FX platform for commercial use.

The company said Chi-FX powers the Brazilian group’s BEI (Brazil Easy Investing), which will allow registered Brazilian brokers to provide retail and institutional investors based outside of Brazil quotes of Brazilian exchange-listed stocks in their local currency.

“This is a major milestone for our Chi-FX platform” said Tal Cohen, CEO of Chi-X Global. “Brazilian market participants will be able to offer their off-shore clients an automated solution for trading Brazilian equities with embedded FX rates, thereby reducing latency, broadening access and minimizing currency risk for international investors. This is an exciting time for Chi-FX and we will be exploring new opportunities to expand the platform throughout Latin America.”

Cicero Vieira Neto, COO of BM&FBOVESPA, said: “We are looking forward to the launch of BEI, which coupled with the recent changes to the CPF registration process, will represent a significant step in the ongoing development

Dan Kessous, CEO, Chi-X Canada commented “We are excited to see our clients reacting to CX2 pricing and features. CX2’s immediate success demonstrates that retail and institutional investors are benefiting from CX2’s unique pricing that rewards liquidity takers and that CX2 is key to reducing the overall cost of trading for investors in Canada.”

Kessous continued “It has been an exciting year for Chi-X Canada. The trading community continues to push our market share to new record highs. We are pleased to report that Chi-X Canada was the only venue to gain market share on a year over year basis in April, rising from 10% to 15% for TSX-listed securities. We remain committed to working with our clients to develop products and services that make trading more efficient.”

“We would like to thank the following vendors for their support and readiness: Fidessa Canada, IRESS Canada, Pico Quantitative Trading, Stockwatch and ThomsonReuters. We look forward to welcoming new vendors over the coming weeks.”